Bonza, the soon-to-launch airline branding itself as a “bogan” carrier offering ultra-low-cost air fares and purple budgie smugglers, will be seriously tested by the soaring cost of jet fuel, experts say, as the carrier enters the final stage of regulatory approval.
Almost a year after it hoped to be in the skies, Bonza has begun conducting proving flights from Sunshine Coast airport to demonstrate to the Civil Aviation Safety Authority (Casa) that its systems and processes are ready to enter the market, after it submitted key components of its application to the regulator in the days before Christmas, Guardian Australia understands.
Casa says it will make a decision after the proving flights are completed in early January.
Bonza generated headlines in October 2021 when it announced its intention to become Australia’s first ultra-low-cost carrier, with hopes to begin flying by early 2022.
Its chief executive, Tim Jordan, said Bonza would focus mostly on leisure destinations and routes without an existing non-stop service, and would avoid flights between capital cities.
After issuing a call out to regional councils to gauge their interest in attracting the airline’s services, it has set up its base on the Sunshine Coast. It initially plans to offer services to 17 airports, including Cairns, the Whitsunday Coast, Melbourne, Port Macquarie, Newcastle and Mildura – but not Sydney.
Bonza is backed by the US private investment firm 777 Partners, which funds several budget carriers around the world. The firm plans to lease to Bonza eight Boeing 737-8 Max planes – it has already received three, which it named Sheila, Shazza and Bazza.
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Those names are part of the branding campaign Bonza has driven since it first presented its purple colour scheme. Budgie smugglers and bikinis featuring the airline’s logo will be sold onboard, with an inflight atmosphere Jordan expects to be shaped by “holidaymakers, bachelor parties, leisure and fun”.
Cabin crew will wear sneakers and shorts, and will be allowed to mix and match their own uniforms, while passengers won’t be able to book tickets through Bonza’s website – only through its smartphone app.
Despite the fanfare, Bonza has been plagued by misfortune.
The airline has been waiting for regulatory approval during a year of strong domestic travel. Crucially, it is now missing out on the school holiday boom, with budget domestic airfares at highs not seen since 2004 and airlines posting record profits thanks to Australians’ soaring appetite for travelling after pandemic restrictions were lifted.
The airline also received some unwelcome publicity thanks to its shirt sponsorship of the A-League club Melbourne Victory, which is the subject of sanctions after a violent pitch invasion last month.
In early 2022, the airline said customers should expect to pay about $50 for every hour they are in the air. Tony Webber, a former chief economist at Qantas, says that promise could be impossible to keep without making a loss, given that jet fuel prices have almost doubled in the past year.
Webber, who now heads the Airline Intelligence and Research group, says budget carriers are particularly sensitive to oil price fluctuations, as jet fuel makes up a larger proportion of their operating costs compared with full-service airlines. He believes for Bonza this figure could be as much as 35%.
“Their unit costs could be almost double what they were using to calculate that $50 per hour promise,” Webber says. To gain regulatory approval, Bonza must show it is financially viable, and Webber suggests this may have been a factor in delaying the process.
Adam Ferrier, a consumer psychologist and founder of the advertising firm Thinkerbell, who has done work for Jetstar, says Bonza has given itself “very little room to manoeuvre in terms of pricing”.
“If you look really cheap, then you actually have to be really, really cheap.”
Ferrier says Bonza’s branding has been distinctive, but questions its strategy of pursuing a “bogan” character.
“It’s generated strong awareness pretty quickly, however middle Australia doesn’t necessarily like being played back such an obvious downmarket version of themselves.
“It’s almost taking the piss out of the local market, and expecting them to be in on the joke. I’m not saying it will or won’t work, it’s just a little dangerous.”
Ferrier says Bonza needs to balance its “strong personality” with a projection of safety and professionalism, brand qualities which “are absolutely paramount in an airline”.
He recalls how Jordan previously ran the Philippine budget carrier Cebu Airlines, when the airline would allow basketball to be played down the aisle.
“You can have fun which is not at the expense of professionalism, but when you’re calling your planes Sheila, Bazza and Shazza, I’d be worried of going too far,” Ferrier says. “You do see brands trying to dial up their Australianness, such as Bunnings … but very few go into the ‘G’day mate how ya goin’ space.”
Webber says Bonza’s blown-out launch date will be seen as “a major issue” internally. “Each day they’re not in the air, it’s costing them.”
Webber calculates that given Bonza have already taken delivery of three aircraft, at an estimated combined cost of about $300m, the airline would need to earn $60m a year from its operations just to make a return on its investment given the lifespan of aircraft.
“Conservatively they’re probably losing close to $1m a week, in terms of opportunity cost of what they’re forfeiting, and that’s not considering actual staff costs, just from the fact they’re not able to make money off the aircraft they’ve bought.”
Bonza has about 90 staff, according to LinkedIn. The company would not confirm its current number of employees, saying only that it had been “actively recruiting 200-plus roles including inflight crew and support roles”.
Webber estimates Bonza would already be paying an annual wage bill of about $9m, based on industry averages.
“They’re burning through money and they’re missing out on exceptionally strong demand for air travel at the moment, which will really be hurting them.”
But Webber plays down any suggestion Bonza will fail to take off, despite all its problems, as its parent company has invested too much. Instead, he predicts, the business will just have to wait longer to become profitable. “I think they’ll stick it out.”
Jordan declined to be interviewd, but provided a written statement.
“We remain fully focussed on the regulatory process and continue to work with Casa on it,” the statement said.
“They do incredibly important work regulating aviation in Australia and we respect the process we’re working through with them. It is wrong of us to comment on when that process will be completed.”